Monthly Archives: August 2014

August 2013, Hector Beverages forayed into the Indian juices and beverage market, dominated largely by MNC’s Coke and Pepsi, but with difference. It introduced two common irresistible Indian flavors ~ Aamras and Jaljeera, under the brand name of Paper Boat. From a starry-eyed start up, Hector beverages has gained lots of fans and market. By clever dip into childhood memories of most average Indians, positioning itself as a health alternative, Paper Boat as captured the young and young-has been alike. How did they achieve this?

For a start, the brand name is unique and easy to remember. The name evokes the nostalgic days when one cajoled paper boats to sail through the rivulets or rain pods, with the feet kissing the wet earth and head covered by nothing more than a piece of cloth. The name ‘Paper Boat’ automatically recalls Childhood memories that subconsciously lead the customer to a ‘happier place’ or a ‘happier time’. Even though the brand name does not synch with the product category or the beverages industry, Paper Boat manages to create a Pleasant Experience with its unique combination of ‘Drinks and Memories’.

Second the product itself. As most of the ingredients are naturally available spices and condiments. It helps differentiate itself from the crowded aerated soft drinks with loads of sugar. By going to back to “desi” roots and sticking onto natural bandwagon, Paper boat could very effectively play the health card. As the products can be used as starter drinks or post-meal digestives, “time of the day” were not a challenge. The flavors one sweet and other slat helped it to reach out to diabetic capital of the world and others at same time. Contrasting flavors found the plate of people with various palates. By keeping the taste closer to mom’s recipe the product endeared itself to ipad and no-pad generations.

Packaging also played an important role in accelerating sales of Paper Boat. With a unique and extremely appealing Packaging with sophisticated ‘matt finish’, the pack had a dignified and yet interesting look. The dynamically vibrant colors, cute doodles at the bottom and the Call out at the back recreates the Magic moments associated with every flavor of the drink served.

Most traditional drinks have bitten dust not because they got their milieu wrong, but the pricing. In a market dominated by Big sumo’s capable of quashing out competition through cheap product supported by heavy marketing and distribution, Paper boat got two things right. Its pricing of less than 50 cents (US) for a 250ml, and $2 for 1000ml, Hector beverages has cleverly positioned Paper Boat as a high quality and healthy beverage by setting competitive pricing.

Paper boat adopted a new style when it comes to distribution. It not only got shelf space for itself in local kirana stores to push the product into the market but also was willing to go that extra mile, well in this case a thousand miles perhaps. Yes, Paper Boats were served at around 10000 feet above sea level to the IndiGo Airline Passengers. Paper Boat also realized the need to as an aspirational brand and present in aspirational platforms like Coffee Shops like Barista and Star hotels like Trident etc.

For a company short on dollars, Hector beverages, cleverly used facebook posts to drive the product. With theme around bringing back childhood memories, connecting Paper Boat was easy. As bloggers and reviewers relived their first experiences of the two flavors with Paper Boats, taste buds were on fire and word of mouth raging.

It is a great story so far for a one year old. What lies ahead for Hector beverages?. What next steps? To address these questions, I looked at similar upstarts in other markets. While there are many examples of traditional beers (most recent being Utah based beer brands taking on Budweiser), Adam Pritchard “Pomegreat” serves as a good example, what happens to a health brand that spread itself thin. Launched in 2004, it managed to get shelf space in Sainsbury and that is when the sales kicked off. It quickly moved from a £600,000 turnover company in 2005, to £15m in 2007. But the economic turndown in 2009 affected the company’s sourcing and revenue was reduced by over 20%. Recently acquired by Simple Great Drinks Company it is being rebranded as Simply Great.

The best Hector beverages must do is to imitate, a very successful brand in beverage market. Red Bull has built itself as a beverage brand by being frugal and focusing on functionality. With no significant investment in mass-marketing campaigns and endorsements, Red Bull marketing is largely community and WOM led. It carefully build customers for life, by allowing them to creatively interact with the brand, build their own “wings”. With no major investment in print media, banners or bill boards, promotions are amusement oriented. Its branding is deliberately “underground”, so that it can appeal to young people. One size and one packaging has done wonders for Red Bull. Paper boat can become Beverage Partners for Events like Marathons or Run For a Cause etc. or even sport tournaments like IPL or the Kabaddi League.

To be successful and go international, Hector must also do some things Red Bull has not done. Since the Jaljeeras and Amras are all “utility” drinks, unlike Red Bull, Hector must focus on campaigns to reach out to convenience stores, Modern trade outlets (petrol stations, Pizza chains, Food courts at SEZs and IT Parks), Goli Vada pav (and other complementing players). Product expansion into several “limbo”, “aam”, “seethapal” extensions is a must. Of the $6 Billion Indian soft drink industry (fuzzy drinks, juices, packaged water, 660 million cases by volume, packaged juices is just about 87 million cases. Of the remaining million cases, lemon segment is about 50%. Hector can use its increasing fan base to its benefits and come up with crowd sourcing ideas where they can set up an online social media campaign of people sharing their ideas and thoughts for Paper Boat. They must pursue “What’s your paper Boat story?” or “Introduce us to a long lost Indian flavour” strategy.

Hector beverage can also play a strategy that is more by accident than design. Paper Boats have found themselves into the shelves and kitchens of restaurants to be used for making Mocktails. Paper Boat Golgappe Mojto and Jaljeera Ice Tea are served in many restaurants. Can Hector exploit partners to increase revenue, popularity and visibility if the drinks are named after PaperBoat, just like McDonald’s Oreo Shake. That is worth pursuing.

One of the common characteristic of most successful companies is the existence of a strong well knitted core team. The core team is the fulcrum around which the organizational learning, experience and knowledge gets ingrained. It is the team that ensures how ownership, initiative, overall organizational culture of the unit is defined and sustained over period. There are many articles written about what kinds of people to spot and recruit for core team. Some generic characteristics that must be avoided are:

Expiry date “selfie”.
They join a start-up not with the interest of gaining experience and be valuable, but join for gaining those stars that are missing on their jackets. Their primary objective of joining a start-up is to gain relevant experience required for completing a professional certification or gain employability in a newer field. Many of them have a definitive expiry date to work with, often coinciding with the professional bodies requirement. While they continue to hold their tasks and deliver results, they would abhor “ownership” and “leadership”. Once the expiry dates near, these associates may find issues with basic infrastructure or working culture and seek newer pastures.

Low integrity “partner”
Many a start-up break because the partners had their own agenda’s. Some would siphon off the revenues, overbill for expenses or spend on booze in Irish Pubs when their official commitments show they are at Down 0. Inflated travel bills, and oversized Pizza parties are early indicators of where the wind is tailing.

Dough only “Scamper”
While salary and perks are important, core team members like to take the challenge of building and sustaining a dream. Scampers may impress at interviews with their middle-class fire in the belly talk, but would dash for a few green ducks.

Sapping “Digger”
Most start-up trust their associates to contribute their might and may not have any formal review and monitor mechanisms. That is where some associates discover opportunities to run errands and businesses on side. Some join start-up to engage and formalize their life events like marriage and divorce. It is not uncommon to see an associate availing leaves for a one month marriage and on return promptly exiting the start-up.

Entrepreneurs building a successful start-up must consider what Dr Kurian, Father of Milk revolution in India, said of spotting long term associates. His mantra was simple, he would walk with them in the corridors of Amul Factory at Anand. He would spot who had picked up the trash he has wantonly thrown into a dust bin. Otherwise, he would accidently take the associate to an employee who has come with crumpled hair and attire and watch how the employee is addressed and motivated to come with better dress sense. His reasoning, love for a place, dignity of labour, sense of ownership and belongingness were all there to witness in that simple act.

From shy to outspoken, gloomy to vibrant, precocious to spontaneous, personality change is not only adopted by humans, brands also morph to a new environment. Be it Peroni’s success story in UK, Skoda Fabia’s repositioning in UK or Netflix in USA, companies have successfully pursued a strategy of premium positioning to command better margins and higher image from home markets. How do companies exploit this strategy?.

For Skoda, originally a Czech company and later acquired by Volkswagen what really worked was their promotional mix of TV and print campaign backed by direct mailings to the existing Skoda customers in UK. By imbibing the Volkswagen model, they were able to change the customer’s perception about Skoda from a “cheap” car to “value for money” car. Skoda’s desperation for rebranding was so extreme that they went as far as using “The Fabia is a car so good that you won’t believe it’s a Skoda”slogan in their ad campaign.Well, the desperation finally paid off because the campaign increased sales of Fabia as well as another model named Octavia by 29% when compared to previous year.

Peroni’s story is little different than that of Skoda’s. Peroni’s aid of “Golden Italian Days” in UK was the real spark behind the success. It gave the UK customers a feel of Italy by depicting the images of Italy of sixties. By invoking nostalgic feelings, Peroni was able to charge premium price for its beer.Netflix, has used “Playful Kiss” drama to attract viewers globally. Burberry of London, for Spanish markets created a premium positioning by adopting a strong classic element and improved fabric and other materials.

The strategy works when the customers are richer, but not well informed. Cultures which associate higher value to tradition, and heritage are the market where the strategy works more effectively, especially for hedonic products. Markets with colonial connections work best for some home brands and can actually lead to international success. British Dyson Vacuum cleaner exploited its British inventor origin and Britain connection to make an entry into Malaysian market and successfully compete with Electrolux and other brands. A grand old strategy perfected by many economy brands like Vichy, Thalion, Lancome in most part of Africa and Asian markets.

The strategy also works when there is a culture wave. Take for example, Korean beauty brands which have discovered great internationalization opportunity in the wake of Gangnam Style shakes and hallyu. Korean companies with French sounding names like Mamonde, Laxara, Laneige have found a niche in China’s market by targeting people who like Korean Soap Opera or younger hipsters who croon to K-pop numbers. What is common for all these brands is they have successfully used a local positioning global brand strategy, there by their marketing communication can reflect the local hues and required flavor.